Features

Philanthrocapitalism: Altruism or Greed?

May 06, 2012

Susan Hoff is currently a M.S. Candidate in Philanthropy and Fundraising at the NYU Heyman Center for Philanthropy and Fundraising. She began her nonprofit career in New York City as a Managing Director and Board Secretary for the Shakespeare Project, an outdoor theatre company that brought free performances to underserved areas in all five boroughs of the city. She also served as Managing Director for the 42nd Street Workshop, a collective of writers and actors. Susan now lives in Cornwall, NY in a 232 year old house with her husband and 10 year old son. Since moving to Cornwall she has sat on numerous committees as a special events coordinator, worked as the Business and Facilities Manager for the Hudson Highlands Nature Museum, and most recently as the Director of Development for the Storm King School, an independent boarding and day school.

Today, as in Andrew Carnegie’s time, the gap between the wealthy and the not so fortunate is creating societal unrest and there is deep skepticism over the intentions of the mega-rich 1% and corporate giving. Philanthrocapitalists are suspect when, like Carnegie and Rockefeller, they are perceived to have made their fortunes on the backs of the not so fortunate. Some corporations that are giving to “change the world” are accused of causing the very problems their giving aims to alleviate.

According to Wiktionary.org, philanthrocapitalism is: The philosophy of applying capitalist style objectives and criteria to directing philanthropic enterprises. It is a term coined by journalist Matthew Bishop and economist and writer Michael Green in their 2008 book, Philanthrocapitalism: How the Rich Can Save the World, which was recently updated in a 2009 paperback edition, Philanthrocapitalism: How Giving Can Save the World. Their book examines the movement that began in the late 1990’s when mega-wealthy business tycoons like Ted Turner, who pledged to give the United Nations one billion dollars, began giving back to society.

Bishop and Green’s book has become the “bible” for up and coming philanthrocapitalists, including the Google founders Larry Page and Sergey Brin. (Why Business Won't Save the World, Michael Edwards vs. Matthew Bishop, Youtube.com, 2010)For others, it has become a threat. “… a giving model that exclusively subscribes to the notion that this particular subgroup, through their use of business methods, is always engaged in better, smarter, and more effective grantmaking has dangerous appeal.” (Garry W. Jenkins, Who’s Afraid of Philanthrocapitalism?, Case Western Reserve Law Review, 2011) The fear expressed is that this new method of giving from the hands of so few will influence public policy as a means to their own ends, and that social movements will no longer have an independent voice for transforming society. Writer and activist, Michael Edwards led the fight with his 2008 book, Small Change, Why Business Won’t Save the World. “My worry is that the hype surrounding philanthrocapitalismwill divert attention from the deeper changes that are required to transform society, reduce decisions to an inappropriate bottom line, and lead us to ignore the costs and trade-offs involved in extending business principles into the world of civil society and social change.”

Then came the impact of the Bill and Melinda Gates Foundation partnering with Warren Buffet. The effect was profound. More was now being asked of foundations, and being asked in a way that called their procedures and results into question. “As foundations are being hard pressed to demonstrate impact and value, they are being asked to ratchet up their strategic vision.” says Jon Funabiki, a former deputy director at the Ford Foundation. (ibid.)

This ongoing debate has created some skepticism. Perhaps, if authors Matthew Bishop and Michael Green had come up with a different name for the first edition of their book, this battle over the legitimacy of philanthrocapitalism would not be so brutal. It has sold a lot of books though, for both sides of the argument.

Each side has presented respectable points of view and it is understandable why they are so passionate about them. The debates can be exciting and thought provoking when not absurd and petty. In the end, though, it may be about power and the threat of losing control of that power. The accusations that this movement will forever damage the values of philanthropy I find hard pressed to believe. The criticisms are mostly speculative. It is too early to tell what kind of an impact philanthrocapitalism will have.

In my logical observation I find this view to be most reasonable: “The way to balance the great power of philanthrocapitalism is not to stop innovations in the scope of charitable giving. Instead, we need to build new institutions of banking, taxation, science and civic participation that support this new philanthropy without giving it unfettered power.” (Robin Rogers, The Hidden Costs of Million-Dollar Donations, The Washington Post, 2011)

Many were threatened by the power of Carnegie and Rockefeller at the turn of the last century. History now shows the positive and negative results of their visions. Philanthropcapitalism will also live through the criticism of history and I anticipate the results will be exciting to observe in our field.